New Delhi, May 16 -- India's banking and financial sector emerged from the Q4FY26 earnings season with improving asset quality, stable credit growth and moderating credit costs, prompting brokerages to turn increasingly optimistic on select lenders and NBFCs for the medium term.

According to a report by Axis Securities, the overall outlook for the BFSI space remains constructive despite external risks linked to geopolitical tensions and elevated global uncertainty. The brokerage believes improving operational efficiency, stable asset quality and steady loan growth could continue supporting earnings momentum across several banking and financial names over the next two years.

"Banks witnessed recovery in corporate demand along with steady...